Swedish landlords in for rent slowdown: report

Published: 16 Jul 2013 10:19 GMT+02:00

Signs of a slowdown in the Swedish property market blossomed this spring with longer waits to lease out premises and relatively small rental increases, according to a new report from the Swedish Property Federation.

Low interest rates and a stable number of vacancies and rentals in recent years has sustained profitability for property companies. However, signs of a slowdown have begun to appear across the country, with the Malmö region hit the hardest due to the weak Danish economy.

"It is clear that regional differences have become more prominent during the spring," said Tomas Ernhagen, chief economist at the Swedish Property Federation (Fastighetsägarna), in a statement.

The trend is set to continue according to findings from the federation's annual Sweden Barometer report.

"For example, 25 percent of property owners in Malmö expect that that office vacancy rates will increase in the coming year. In Gothenburg and Stockholm, only five percent respond similarly," Ernhagen added.

Rental prices across these regions reveal a more dramatic gap with only 13 percent of property owners in Malmö reporting that prices have increased over the past six months. Gothenburg (57 percent) and Stockholm (40 percent) experienced less of an affect, but even in these markets the trend slowed noticeably during the spring.

The report concluded, however, that most property owners maintain a positive outlook on future developments with a majority planning substantial purchases in the next twelve months.

"Real estate activity is still high and the risk of a sharp decline is small," Ernhagen said.

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